Carvana (NYSE:CVNA) Q3 2025 Earnings Call October 29, 2025 05:30 PM ET Company ParticipantsMark Jenkins - CFOErnie Garcia - CEOMeg Kehan - Senior Director of Capital Markets and Investor RelationsJeff Lick - Managing DirectorRajat Gupta - VPConference Call ParticipantsAndrew Boone - AnalystDaniela Haigian - VP and Equity Research AnalystChris Bottiglieri - Equity Research AnalystMarvin Fong - Equity Research Analyst, Consumer, and Technology ServicesChris Pierce - Research AnalystMichael Montani - Research ...

Financial Data and Key Metrics Changes - In Q3 2025, Carvana achieved a record retail units sold totaling 155,941, representing a 44% increase year-over-year [11] - Revenue reached $5.647 billion, marking a 55% increase year-over-year and exceeding an annual revenue run rate of $20 billion for the first time [11][12] - Net income was $263 million, up $115 million from the previous year, with a net income margin of 4.7% [16] - Adjusted EBITDA was $637 million, an increase of $208 million, with an adjusted EBITDA margin of 11.3%, slightly down from 11.7% [17] Business Line Data and Key Metrics Changes - Non-GAAP retail GPU decreased by $77, primarily due to higher retail depreciation rates [12] - Non-GAAP wholesale GPU decreased by $168, driven by higher wholesale depreciation rates and retail units sold growth outpacing ADESA marketplace growth [12] - Non-GAAP other GPU increased by $63, attributed to improvements in cost of funds and higher finance and VSC attach rates [12] Market Data and Key Metrics Changes - The company reported that 40% of customers in Phoenix are now receiving same or next-day delivery, compared to 10% nationwide [8] - More than 30% of retail customers complete the entire process without interaction with customer advocates until delivery or pickup [8] Company Strategy and Development Direction - Carvana aims to sell 3 million cars at a 13.5% adjusted EBITDA margin within the next 5 to 10 years, focusing on improving customer experience and operational efficiency [5][10] - The company is investing in reconditioning capacity and digital auction capabilities to enhance inventory management and customer delivery times [6][7] - Carvana is leveraging its vertically integrated finance platform to strengthen its balance sheet and drive toward investment-grade credit ratios [18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the performance of 2024 and 2025 loan originations, indicating strong loan performance relative to industry standards [23] - The company remains optimistic about future growth opportunities, emphasizing the importance of prioritizing opportunities amid evolving technology and customer preferences [10] - Management noted that while the expiration of EV tax credits has shifted customer preferences, it has not significantly impacted overall demand [55] Other Important Information - Carvana retired $559 million of its 2028 senior secured notes and $98 million of its 2025 senior unsecured notes, reducing total corporate debt retired in 2024 and 2025 to $1.2 billion [18] - The company has expanded loan sale partnerships, formalizing agreements for the sale of up to $14 billion of future loan principal [14][15] Q&A Session Summary Question: Can you talk about the health of the loan portfolio and the need for incremental reserves? - Management indicated that 2024 and 2025 loan originations are performing well, with strong validation from partners like Ally Financial, which increased its loan purchase agreement based on performance trends [23][24] Question: Can you discuss the operating expense per unit and future opportunities to drive it down? - Management explained that while operating expenses ticked up sequentially, they expect to drive down operational expenses over time through continued efficiency improvements [26][28] Question: How do you see the impact of EV tax credits on demand for used cars? - Management noted that the expiration of EV tax credits has shifted customer preferences but has not significantly impacted overall demand, and they remain optimistic about the long-term potential of EVs [55] Question: Can you provide insights on the same-day delivery test in Phoenix? - Management highlighted the clear relationship between speed and conversion, emphasizing the strategic importance of building this capability to differentiate from competitors [60][62] Question: How does Carvana view competition from new entrants like Amazon? - Management stated that the focus remains on delivering the best customer experience and that the majority of the used car market is still dominated by traditional retailers, which positions Carvana favorably [68][69]

BREAKING: Tech Futures Rise On Amazon, Apple Carvana (CVNA) sold off late Wednesday despite reporting better-than-expected third-quarter earnings, as margins came under some pressure. The online used car seller, known for car vending machines and home delivery, reported adjusted Q3 earnings per share of $1.50, up 134% vs. a year earlier. Revenue swelled 55% to $5.65 billion, the second straight quarter of accelerating growth. Analysts had expected… Related news Stock Of The Day Hits This Buy Point After Ana ...

Core Insights - Carvana has reported another sales beat, indicating strong performance in the used car market [1] - The company is focusing on same-day deliveries as a strategy to enhance customer satisfaction and drive sales growth [1] Sales Performance - Carvana's recent sales figures exceeded expectations, showcasing resilience in a competitive market [1] - The company continues to leverage its online platform to attract customers, contributing to its sales success [1] Strategic Initiatives - The introduction of same-day delivery services is aimed at improving customer experience and increasing market share [1] - This initiative reflects a broader trend in the industry towards faster and more convenient delivery options [1]

Financial Metrics Definitions - The report defines Non-GAAP Gross Profit, Non-GAAP SG&A Expense, and Adjusted EBITDA as key metrics, clarifying their calculation methods involving depreciation, amortization, share-based compensation, and Root warrant revenue adjustments[3, 4, 5, 6] - Adjusted EBITDA is calculated as Non-GAAP Gross Profit minus Non-GAAP SG&A Expense[7] Unit Sales Performance - Retail units sold increased significantly over the quarters, reaching 155,941 in Q3 2025[8] - Wholesale vehicle units sold also grew, totaling 80,369 in Q3 2025[8] - Wholesale marketplace units transacted reached 260,805 in Q3 2025[8] GPU Analysis (Q3 2024 vs Q3 2025) - Total GAAP GPU decreased by $65, from $7,427 to $7,362[9] - Retail Non-GAAP GPU decreased by $77, from $3,617 to $3,540, driven by higher retail depreciation rates[9] - Wholesale marketplace Non-GAAP GPU decreased by $142, from $552 to $410, influenced by an 11% increase in wholesale marketplace units transacted offset by 44% retail units sold growth[9] - Other Non-GAAP GPU increased by $63, from $2,945 to $3,008, due to improvements in cost of funds and higher finance and VSC attach rates, partially offset by higher than normalized loan sales relative to originations in Q3 2024[9] - Total Non-GAAP GPU decreased by $182, from $7,685 to $7,503[9] SG&A Expense per Unit Analysis (Q3 2024 vs Q3 2025) - Total GAAP SG&A Expense per Unit decreased by $501, from $4,317 to $3,816[9] - Carvana Operations SG&A per unit decreased by $96, from $1,731 to $1,635, due to continued operations efficiencies[9] - Wholesale marketplace Operations SG&A per unit decreased by $48, from $138 to $90, driven by cost leverage on retail units sold growth[9] - Overhead SG&A per unit decreased by $314, from $1,353 to $1,039, also due to cost leverage on retail units sold growth[9] - Advertising SG&A per unit increased by $138, from $516 to $654, reflecting increased advertising spend[9] - Total Non-GAAP SG&A Expense per Unit decreased by $319, from $3,737 to $3,418[9]

The online used-car seller said revenue climbed to $5.65 billion from $3.66 billion a year ago as units sold climbed 44% to 155,941. ...

247 Wall Street Carvana (NYSE: CVNA) reports Q3 2025 earnings after the close today. The used-car disruptor’s stock has surged this year as profitability and scale have accelerated faster than even bullish investors expected. After a six-quarter streak of positive net income and a historic Q2 that saw record revenue, margins, and units sold, the question now is whether Carvana can maintain the pace of execution as growth normalizes. CEO Ernie Garcia called Q2 “another exciting quarter” where Carvana becam ...

Online used-car retailer Carvana Co. continued to grow sales at record levels and beat profit estimates, leading the company to project full-year profits that will hit the high end of its previous projection https://t.co/HvD5aUYJVd ...

Sales Performance - Retail vehicle sales reached $4.0 billion in Q3 2025, up from $2.5 billion in Q3 2024, and $10.4 billion for the nine months ended September 30, 2025, compared to $7.1 billion in the same period of 2024[235]. - The number of retail vehicles sold increased by 43.5% to 155,941 in Q3 2025, compared to 108,651 in Q3 2024, and by 43.4% to 433,119 for the nine months ended September 30, 2025, compared to 301,969 in the same period of 2024[228]. - Wholesale sales totaled $1.2 billion in Q3 2025, up from $786 million in Q3 2024, and $3.1 billion for the nine months ended September 30, 2025, compared to $2.2 billion in the same period of 2024[236]. - Other sales and revenues, including finance receivables and complementary products, amounted to $474 million in Q3 2025, compared to $326 million in Q3 2024, and $1.3 billion for the nine months ended September 30, 2025, versus $834 million in the same period of 2024[237]. - Retail vehicle sales increased by $1.5 billion to $4.0 billion for the three months ended September 30, 2025, compared to $2.5 billion for the same period in 2024, representing a 57.1% increase[285]. - Wholesale sales and revenues rose by $391 million to $1.2 billion for the three months ended September 30, 2025, compared to $786 million in the same period of 2024, marking a 49.7% increase[288]. - Total net sales and operating revenues reached $5.6 billion for the three months ended September 30, 2025, up 54.5% from $3.7 billion in the same period of 2024[283]. - Retail vehicle gross profit increased by $159 million to $539 million for the three months ended September 30, 2025, compared to $380 million in the same period of 2024, a 41.8% increase[292]. - Wholesale gross profit increased by $34 million to $135 million for the three months ended September 30, 2025, compared to $101 million in the same period of 2024, a 33.7% increase[295]. - Other sales and revenues increased by $148 million to $474 million for the three months ended September 30, 2025, compared to $326 million in the same period of 2024, a 45.4% increase[290]. Customer Satisfaction and Engagement - Customers rated the company an average of 4.7 out of 5.0 from over 236,000 surveys, indicating strong customer satisfaction and potential for repeat business[230]. - Average monthly unique visitors rose to 19,636 thousand in Q3 2025, up from 17,321 thousand in Q3 2024, indicating a growth of 13.4%[253]. - Total website units listed at the end of Q3 2025 were 67,236, compared to 45,974 in Q3 2024, marking an increase of 46.2%[253]. Financial Performance and Profitability - Total gross profit for the three months ended September 30, 2025, was $1.1 billion, a 42.3% increase from $807 million in the same period of 2024[283]. - Retail revenue per retail unit sold increased to $25,625 for the three months ended September 30, 2025, compared to $23,405 in the same period of 2024, a 9.5% increase[286]. - Total gross profit per retail unit for the nine months ended September 30, 2025, was $7,252, compared to $6,998 in 2024[317]. - Adjusted EBITDA for the three months ended September 30, 2025, was $637 million, up from $429 million in 2024, while for the nine months it was $1.726 billion compared to $1.019 billion in 2024[317]. Operational Efficiency and Strategy - The company aims to optimize average days to sale, which can lead to higher average selling prices and gross profit per unit sold[238]. - The company plans to increase the purchase of vehicles from customers to expand inventory selection and enhance profitability compared to auction-acquired vehicles[238]. - The company plans to expand its logistics network to enhance vehicle transportation efficiency post-acquisition[251]. - Future strategies include increasing monetization of finance receivables through securitization transactions and expanding financial partner relationships[251]. - The company aims to optimize purchasing and pricing strategies to better predict customer demand and improve acquisition costs[251]. Liquidity and Capital Management - As of September 30, 2025, the company had total liquidity resources of $6.438 billion, up from $5.690 billion on December 31, 2024[324]. - The company has committed liquidity resources available of $4.072 billion as of September 30, 2025, compared to $3.595 billion on December 31, 2024[324]. - The company expects to fund growth and expansion primarily through cash generated from operating activities over the next 12 months[320]. - The company entered into a $600 million revolving credit facility in September 2025 to fund certain finance receivables until March 29, 2027[328]. - The company issued 1.5 million shares of Class A common stock at a weighted-average price of $364.93, generating gross proceeds of $539 million during the three months ended September 30, 2025[322]. Debt and Interest Management - As of September 30, 2025, the outstanding principal amount of indebtedness was $5.060 billion, down from $5.469 billion on December 31, 2024[338]. - The company voluntarily redeemed $559 million of principal amount of the 2028 Senior Secured Notes for $578 million during the three months ended September 30, 2025[323]. - Interest expense, net decreased by $32 million to $125 million during the three months ended September 30, 2025, compared to $157 million in 2024, and decreased by $96 million to $407 million for the nine months ended September 30, 2025, compared to $503 million in 2024[304]. Risks and Challenges - The company faces risks related to macroeconomic conditions, including economic slowdowns or recessions[356]. - The company relies on the sale of automotive finance receivables for a substantial portion of its gross profit[359]. - The company is dependent on key personnel to operate its business[359]. - The company has substantial indebtedness and must generate sufficient cash flow to manage it[359]. - The trading price of the company's Class A common stock is volatile[359]. - The company may experience risks associated with acquisitions and strategic initiatives[359].

Dear Shareholders, The third quarter was another exceptional quarter for Carvana. We still have significant fixed cost leverage opportunities that we expect to achieve consistently over time as we grow. We are still investing in foundational capabilities that strengthen, differentiate, and further vertically integrate our business, deepening our competitive moats. We still have significant capacity for growth and positive feedback that we are investing in and unlocking now. We currently have inspection and ...